Political upheaval grips FDI

FDI announcement shakes the government as all states have not taken to the news very well. Will the government get the support it requires for its success?

Neha Malhotra
Sub Editor

The announcement of the allowing of 51 per cent FDI in multi-brand retail has created ripples within the government structure. As per the FDI being allowed, the final acceptance for allowing of FDI and trade licenses vests in the hands of the states under the Shops and Establishment Acts in those states where population exceeds the one million mark.

While some states agreed, the others strongly condemned the move. The government is now in a shaky position and will have to work around to keep its hold. Certain states have expressed cheer and support of the FDI citing increased employment and benefit to farmers as the primary gain of the allowing of FDI in multi-brand retail.

Trinamool Congress has announced that it will snap its ties with the United Progressive Alliance (UPA) government at the Centre and withdraw its support. The ministers are said to submit their resignation this Friday, if certain demands on subsidised LPG cylinders and hike of diesel prices are not addressed. They also suspect the government to have initiated the FDI to draw cover on the coal blocks allocation scandal.

The BJP ruled states too have unanimously decided against the implementation of the FDI.

There is also a speculation on the violations arising out of India’s international agreements. However, it was later cleared that the FDI is a pre-establishment and is not covered under the Bilateral Investment Promotion and Protection Agreement (BIPA).

States and status of FDI approvals

States

FDI acceptance

Haryana

Yes

Maharashtra

Yes

Delhi

Yes

Rajasthan

Yes

Assam

Yes

Jammu & Kashmir

Yes

Uttarakhand

Yes

Andhra Pradesh

Yes

Odisha

Not in favour

Uttar Pradesh

Not in favour

West Bengal

Not in favour

Madhya Pradesh

Not in favour

Bihar

Not in favour

Gujarat

Not in favour

Tamil Nadu

Not in favour

Punjab

Not decided

Jharkhand

Not decided

Karnataka

Not decided

A majority of the support still points towards a negative response. Since the states and the government in itself are not being able to resolve their issues, what do international brands look forward to in the Indian market? If a brand which has pan-India expansion plans will be in affix and as a result may choose not to make an Indian entry. Conducive and stable political structure will be the attractors for global players.

In turn, the $3 billion that is being expected to be invested in India will definitely fall short. The government and the states need to come out of the political fight, put on their thinking caps and look at the bigger picture and come to a decision that will be of good to the nation as a whole.